Giverny Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. You should check out Giverny Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Giverny Capital highlighted a few stocks and Heico Corp (NYSE:HEI) is one of them. Heico is an aerospace and electronics company that focuses on niche markets. Year-to-date, Heico Corp (NYSE:HEI) stock lost 12.8% and on May 22nd it had a closing price of $93.99. Here is what Giverny Capital said:
“Heico has been one of the best performing stocks in the US over the past 20 years, and we feel lucky to have bought it at recent prices. Run for three decades by Laurans Mendelson and his sons Eric and Victor, Heico has pioneered the market for private label aftermarket parts for the aerospace industry. It has made scores of small acquisitions of niche parts manufacturers and today has an extensive parts catalog and unparalleled skill at working with the Federal Aviation Administration (FAA) to get approval of new products. Giverny Capital has owned Heico for years, but the stock generally is so expensive we did not hold much hope of establishing a position for GCAM. We responded to the recent decline in the Heico Class A shares by buying a significant position. Undoubtedly, airlines are going to fly many fewer miles this year, and consequently buy fewer spare parts. But long-term, it feels inevitable that FAA-approved private label spares will take share from OEM parts, given the substantial price disparity. Like Carmax, Heico has a low-single digit market share in an enormous industry. It grew its operating income from $90 million to $460 million over the past decade, and in our estimation can grow for many more years. The Heico Class A shares have identical economic rights to common shares, but fewer voting rights, and typically trade at a discount.”
In Q4 2019, the number of bullish hedge fund positions on Heico Corp (NYSE:HEI) stock increased by about 24% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with HEI’s growth potential. Our calculations showed that Heico Corp (NYSE:HEI) isn’t among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
